MY Stock 118 KLSE News & Tips

Monday, October 2nd, 2017

PETALING JAYA: His Majesty Sultan Ibrahim Sultan Iskandar of Johor has emerged as the second largest individual shareholder of Berjaya Assets Bhd (BAssets) with a 10.09% stake.
This comes after the acquisition of 80 million shares on Sept 27, increasing his total number of shares in the company to 120 million.

“I am very pleased that DYMM Sultan Ibrahim has increased his stake in BAssets. This demonstrates His Majesty’s positive outlook for BAssets’ long-term future. His Majesty’s stature as the second largest substantial shareholder will definitely augur well for BAssets in the expansion of its businesses,” said BAssets’ largest shareholder, Tan Sri Vincent Tan.

BAssets Group is the major owner of Berjaya Times Square, one of Malaysia’s largest retail and commercial malls which houses Berjaya Times Square Theme Park, the largest indoor theme park in Malaysia. In Johor Baru, the group owns the Berjaya Waterfront Hotel, Shopping Complex and Ferry Terminal, as well as office units at Menara MSC Cyberport.

BRUSSELS, Oct 2 — The European Union is drawing up guidelines on how much patent holders should charge for their technologies, a thorny issue that pits Apple and other users against Qualcomm and Ericsson. Trillions of dollars in sales are at…

KUALA LUMPUR, Oct 2 — The Sultan of Johor, Sultan Ibrahim Sultan Iskandar is now the second largest individual shareholder in Berjaya Assets Bhd with a 10.09 per cent stake, after acquiring 80 million shares to increase his total number of…

PETALING JAYA: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – dipped from 50.4 in August to 49.9 in September, after showing improvement for the first time in four months in August, on reduced new business orders that declined for the fifth successive month.

IHS Markit, which compiles the survey, however, said business conditions were largely unchanged. That said, the PMI average over the third quarter of 2017 as a whole was the highest since Q1’2015.

Firms that recorded a decrease in new orders commented on weak underlying demand. Meanwhile, new export orders declined following an expansion in August.

Manufacturing output rose further at the end of the third quarter. However, the rate of expansion was only fractional and softened from August’s six-month high.

Malaysian manufacturers continued to raise their staffing levels despite the ongoing decline in new work. The rate of employment growth was modest, but the second-fastest since October 2015. Evidently, there were sufficient resources to enable a timely completion of unfinished business, with backlogs decreasing for the fourth consecutive month.

Firms faced sharp cost inflationary pressures due to a general rise in raw material prices. Reflecting higher cost burdens, firms raised their charges again in September. Rates of inflation for both input costs and selling prices quickened to the fastest since May.

Purchasing activity fell at a solid pace in response to lower sales volumes. As a consequence, stocks of purchases also declined. Delivery times shortened for the first time in seven months during September, albeit fractionally. The improvement in vendor performance reflected special requests for faster deliveries, according to survey respondents.

Stocks of finished goods declined for the sixth consecutive month during September, with panellists reporting efforts to streamline inventories.

Firms remained confident towards the 12-month outlook for output. Panellists commented on planned expansions and expected improvements in market demand.

Commenting on the Malaysian Manufacturing PMI survey data, Aashna Dodhia, economist at IHS Markit said: “The underlying indicators that signalled some signs of recovery in the manufacturing sector in August proved to be transitory as operating conditions were broadly unchanged in September. Weak demand contributed to reduced new business and only a fractional expansion in output. Moreover, there was a renewed decline in new export orders.

“On the bright side, employment rose for the third successive month. Over the third quarter of 2017 as a whole, the PMI showed the highest average since Q1’2015. IHS Markit forecasts industrial production growth of 4.6% in 2017.”

PETALING JAYA: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – dipped from 50.4 in August to 49.9 in September, after showing improvement for the first time in four months in August, on reduced new business orders that declined for the fifth successive month.

IHS Markit, which compiles the survey, however, said business conditions were largely unchanged. That said, the PMI average over the third quarter of 2017 as a whole was the highest since Q1’2015.

Firms that recorded a decrease in new orders commented on weak underlying demand. Meanwhile, new export orders declined following an expansion in August.

Manufacturing output rose further at the end of the third quarter. However, the rate of expansion was only fractional and softened from August’s six-month high.

Malaysian manufacturers continued to raise their staffing levels despite the ongoing decline in new work. The rate of employment growth was modest, but the second-fastest since October 2015. Evidently, there were sufficient resources to enable a timely completion of unfinished business, with backlogs decreasing for the fourth consecutive month.

Firms faced sharp cost inflationary pressures due to a general rise in raw material prices. Reflecting higher cost burdens, firms raised their charges again in September. Rates of inflation for both input costs and selling prices quickened to the fastest since May.

Purchasing activity fell at a solid pace in response to lower sales volumes. As a consequence, stocks of purchases also declined. Delivery times shortened for the first time in seven months during September, albeit fractionally. The improvement in vendor performance reflected special requests for faster deliveries, according to survey respondents.

Stocks of finished goods declined for the sixth consecutive month during September, with panellists reporting efforts to streamline inventories.

Firms remained confident towards the 12-month outlook for output. Panellists commented on planned expansions and expected improvements in market demand.

Commenting on the Malaysian Manufacturing PMI survey data, Aashna Dodhia, economist at IHS Markit said: “The underlying indicators that signalled some signs of recovery in the manufacturing sector in August proved to be transitory as operating conditions were broadly unchanged in September. Weak demand contributed to reduced new business and only a fractional expansion in output. Moreover, there was a renewed decline in new export orders.

“On the bright side, employment rose for the third successive month. Over the third quarter of 2017 as a whole, the PMI showed the highest average since Q1’2015. IHS Markit forecasts industrial production growth of 4.6% in 2017.”

KUALA LUMPUR: The Ministry of International Trade and Industry (Miti), which previously contended that the trade surplus with the US stands at US$5 billion and not US$25 billion as per numbers quoted by the US government, has furnished American officials with an explanation for it, citing the current structure of the world economy.

Speaking to reporters at the launch of Honeywell Regional Asean Headquarters in Bangsar South City, Miti Minister Datuk Seri Mustapa Mohamed said the two governments have gone through the numbers and compared notes on what had contributed to the difference in their numbers.

“We have explained that this has got to do with the world economy, a large number of US multinational companies are doing business here and we are exporting a lot to the world, not just the US, and we are importing a lot from the US as well,” he said, adding that recent purchases made by Malaysian aviation players from the US could bridge the gap.

Mustapa also expressed hopes for a budget that is supportive of investment and trade. He expects Malaysia can sustain its double-digit exports growth performance going forward, after having recorded a 30.9% jump in July.

Meanwhile, Honeywell International Inc, which has had a presence in Malaysia for more than 30 years, is aiming to achieve about 15% revenue growth from its Asean operations, which equates to being between two and three times the regions average gross domestic product (GDP) growth in the next two to three years.

Honeywell is a US conglomerate involved in the aerospace, home and building technologies, performance materials and technologies and safety and productivity solutions segments.

It is also the first multinational company to join Malaysian Investment Development Authorities’ Principal Hub initiative.

Asean contributes about US$800 million (RM3.38 billion) in sales to Honeywell’s total revenue of US$39 billion.

In Malaysia, Honeywell has invested more than US$500 million and has a workforce of over 1,500 employees.

Its Asean president Briand Greer said Malaysia was the destination of choice for Honeywell to set up its regional headquarters due to the encouragement received from Malaysian authorities.

“Fundamentally it is well located in the region. We have put our factories in Penang, we have had a great working relationship with Malaysia,” Greer said.

Honeywell’s new Asean regional headquarters, which will be housed at its existing premises in Malaysia, will support its businesses across the region by providing leadership, local and timely decision-making and the capability to deliver innovative, specific solutions to industries including aerospace, oil and gas, automation and process controls, home and building solutions, industrial safety, mobile business productivity and automated warehouse operations.

The Asian countries are expected to lead market growth in the Industrial Internet of Things arena, which is expected to be worth US$54 billion by 2020.

PETALING JAYA: Tropicana Corp Bhd has announced the retirement of its CEO Datuk Yau Kok Seng, who has helmed the group since January 2013.

The property developer said in a statement that prior to this, the board had been informed of Yau’s intention to retire at the end of 2017. However, due to health reasons, the date has been brought forward to Nov 30, 2017. Tropicana said it will continue to conduct a comprehensive search for his replacement. Yau is a chartered accountant and has more than 30 years experience in auditing, corporate finance and general management.

Prior to joining Tropicana he was with Hong Leong Industries Bhd where he served as group managing director since September 2011 and prior to that, he was Sunway Holdings Bhd managing director since April 2001.

Meanwhile, Dion Tan Yong Chien has been redesignated as managing director from executive director previously. Dion, 27, is the son of Tan Sri Danny Tan Chee Sing, a major shareholder of Tropicana. His eldest brother Datuk Dickson Tan Yong Loong is the deputy group CEO while another brother, Dillon Tan Yong Chin is the executive director.

PETALING JAYA: AffinHwang Capital foresees a downside risk to its 6% loan growth target for 2017, though the fourth quarter may potentially see more robust demand.

It said the banking system saw increased disbursement of 9.7% month-on-month (m-o-m) in August (versus a 5.4% m-o-m decline in July), hence supporting overall system loan growth of 5.8% y-o-y. Nonetheless, on a year-to-date basis, the banking system loan growth is still at a subdued 2.4% (with an annualised growth rate of 3.5%) versus its full year forecast of 6%.

“On a more positive note, we do not discount the possibility of a strong fourth quarter (with the commencement of a new capex cycle), where loan disbursements could ramp up,” AffinHwang said in its report today.

Despite the subdued loan growth year-to-date, it said banks continue to see robust expansion in its fund-based income (1H17 +9.3% y-o-y) as a result of the lower overall funding cost and repricing of loans, as reflected in 1H17 net interest margin, which was up 7bps y-o-y to 2.32%.

“We foresee sector-earnings growth of 10.5% y-o-y in 2017, followed by a more modest 4.4% y-o-y in 2018 and 3.8% y-o-y in 2019. Favourable domestic demographic trends (driving consumption and housing needs), ample infrastructure projects in the pipeline and accommodative monetary policy are supportive reasons for the growth in earnings,” said AffinHwang.

It maintained its sector overweight call with its sector top picks AMMB Holdings Bhd, Public Bank Bhd and Malayan Banking Bhd.

Maintaining its loan growth assumption of 5.6% for 2017, TA Securities noted that consumer spending remains resilient and supportive of loan growth while optimism among businesses have improved.

“We believe the overall debt profile for the country remains healthy. Other drivers for earnings growth include potential hikes in the overnight policy rate, leading to margin expansion. We expect the increase in rate to augur well for the banking sector as margins are compressed by competitive pressures,” said TA.

It reiterated its overweight stance on the sector, premised on a more sanguine macro outlook.

PETALING JAYA: Firms are optimistic about business prospects for the next six months, according to the RAM Business Confidence Index.

The rating agency said in a statement, the Corporates Index and SME Index continued to show positive sentiment, with respective readings of 55.8 and 52.1 for the period of Q4 2017 to Q1 2018.

RAM Ratings said corporates have been consistently more sanguine throughout all three earlier readings.

Compared to SMEs, the corporate segment is more stable and stronger sentiment throughout the observed periods is attributable to their economies of scale, operational flexibility, client bases and bargaining power to ride through short-term economic vagaries.

SMEs’ sentiment, however, is more volatile, in tandem with the greater uncertainties faced by their businesses.

RAM said export-oriented firms are more bullish than their domestic-centric counterparts.

“Given the momentum of global trade recovery, which has led to seven months of double-digit export growth for Malaysia since December 2016, export-oriented businesses stand to gain from this thrust in external demand. This affirms the higher index values for turnover and profitability expectations, in all the four previous surveys for SMEs and corporates to date,” it noted.

The rating agency said corporates are the most positive about business expansion at 61.8, but capacity utilisation recorded the lowest reading of 53.0, with close to 75% of respondents expecting normal capacity utilisation rate of between 75% and 95%.

For SMEs, the overall sentiment still showed greater variation with each survey and this quarter’s reading has reversed from the higher readings of the previous quarter.

“In particular, the areas that show the least optimism for Q4 2017- Q1 2018 were turnover and profitability, which fell back below 50, to 49.6 and 48.7 respectively, from 52.2 and 50.6 in the preceding survey,” RAM noted.

Despite the poorer performance outlook, SME respondents still expressed optimism on business expansion (55.8) and hiring sentiment (56.3) in the next two quarters.

Looking ahead, both corporates and SMEs at large have maintained overall positive sentiments going into 2018, despite some downside prospects in business outlook among SMEs.

“This is perhaps a welcome indication that the momentum of economic recovery in Malaysia has an element of sustainability. This is especially so when firms have continued to express intentions to expand capacities and keep up hiring as well as capital investments,” RAM said.